What Your Credit Score Says About You
It's amazing how big an effect three little numbers can have on you, but make no mistake, your credit score is one of the more important numbers you'll be associated with throughout your life. Your credit score can affect just about every major buying decision you make, from applying for credit cards, buying a car, even buying a home! Most lending institutions will examine your credit score and history to determine your lending eligibility.
Lending institutions have to examine your credit score and financial history to determine whether they should risk loaning to you. The higher your score, the lower a risk you are for missed or late payments. Also, high scores give financial institutions wiggle room when it comes to fair interest rates.
So what is a credit score exactly and who or what determines what yours is? First off, credit scores are determined by the big three credit reporting bureaus, such as Equifax or TransUnion. That means you technically have three distinct credit scores, though all should be around the same number.
These agencies determine your credit score by examining a variety of factors about your credit history. Debt to income ratio and credit availability are the big factors. Late or missed payments, bankruptcy claims, disputed debt and more also factor into your credit score.
From this information, the bureaus are able to assign each consumer a numerical credit score based on their results. Credit scores can range from 0 to as high as 990 depending on the credit reporting agency. Each agency has its own method of assigning credit scores.
Whatever the highest score is, you want to get as close to that as possible. A credit score of 725 or higher will get you approved for a loan. It should also earn you low interest rates. What is considered a good credit score can change with the economic climate as well - the tougher the economy is, the tougher lenders will probably be on approving loans.
Your credit score paints a picture of you as a consumer to any company pulling it. It gives them an idea of how responsible you are with your money and paying debts. It even gives them an idea of how early on you began building up your credit, or if you haven't at all! You may even have to allow potential employers to pull your credit score and history nowadays.
Staying informed of your credit score and report is important given the major effects it can have on your life. There are plenty of free services to use, if you do your research and find the ones that are truly free. No matter what, you should pull your credit report and score at least once a year, to make sure there are no mistaken issues in it. This will ensure there are no surprises waiting when it's time for you to get that new car or home.
Lending institutions have to examine your credit score and financial history to determine whether they should risk loaning to you. The higher your score, the lower a risk you are for missed or late payments. Also, high scores give financial institutions wiggle room when it comes to fair interest rates.
So what is a credit score exactly and who or what determines what yours is? First off, credit scores are determined by the big three credit reporting bureaus, such as Equifax or TransUnion. That means you technically have three distinct credit scores, though all should be around the same number.
These agencies determine your credit score by examining a variety of factors about your credit history. Debt to income ratio and credit availability are the big factors. Late or missed payments, bankruptcy claims, disputed debt and more also factor into your credit score.
From this information, the bureaus are able to assign each consumer a numerical credit score based on their results. Credit scores can range from 0 to as high as 990 depending on the credit reporting agency. Each agency has its own method of assigning credit scores.
Whatever the highest score is, you want to get as close to that as possible. A credit score of 725 or higher will get you approved for a loan. It should also earn you low interest rates. What is considered a good credit score can change with the economic climate as well - the tougher the economy is, the tougher lenders will probably be on approving loans.
Your credit score paints a picture of you as a consumer to any company pulling it. It gives them an idea of how responsible you are with your money and paying debts. It even gives them an idea of how early on you began building up your credit, or if you haven't at all! You may even have to allow potential employers to pull your credit score and history nowadays.
Staying informed of your credit score and report is important given the major effects it can have on your life. There are plenty of free services to use, if you do your research and find the ones that are truly free. No matter what, you should pull your credit report and score at least once a year, to make sure there are no mistaken issues in it. This will ensure there are no surprises waiting when it's time for you to get that new car or home.
About the Author:
About the Author: Tawana Rashing is a debt counselor and credit repair specialist working with consumers to improve their credit score. She is a part time writer for several websites revolving around the topic of credit and credit repair. In her spare time she enjoys cooking, exercising and volunteering at her childrens' school.
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